[Federal Register Volume 81, Number 202 (Wednesday, October 19, 2016)]
[Rules and Regulations]
[Pages 71981-71983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25080]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 121, 124, and 126
RIN 3245-AG24
Small Business Mentor Prot[eacute]g[eacute] Programs; Correction
AGENCY: U.S. Small Business Administration.
ACTION: Correcting amendments.
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SUMMARY: The U.S. Small Business Administration (SBA) published a final
rule in the Federal Register on July 25, 2016 (81 FR 48557), amending
its regulations to establish a new Government-wide mentor-
prot[eacute]g[eacute] program for all small business concerns,
consistent with SBA's mentor-prot[eacute]g[eacute] program for
Participants in SBA's 8(a) Business Development (BD) program. The rule
also made several additional changes to current size, 8(a), Office of
Hearings and Appeals, and HUBZone regulations, concerning among other
things, ownership and control, changes in primary industry, economic
disadvantage of a Native Hawaiian Organization (NHO), standards of
review, and interested party status for some appeals. This document
makes several technical corrections to that final rule, including
correcting citations, eliminating a paragraph that conflicts with a new
provision added by that final rule, and making conforming amendments.
DATES: Effective October 19, 2016.
FOR FURTHER INFORMATION CONTACT: Michael McLaughlin, Office of Policy,
Planning & Liaison, U.S. Small Business Administration, 409 Third
Street SW., Washington, DC 20416; 202-205-5353;
michael.mclaughlin@sba.gov.
SUPPLEMENTARY INFORMATION: The final rule published on July 25, 2016,
at 81 FR 48557, contained several errors,
[[Page 71982]]
including inadvertent oversights and omissions that must be corrected
in order to ensure consistency within the regulations and to avoid
public uncertainty or confusion. First, a correction is needed because
the amendment in instruction 5 on page 48579, column one, should have
also applied to Sec. 121.702(b)(1)(i), not just paragraph (a)(1).
Specifically, the instruction should have read: ``Amend Sec. Sec.
121.702(a)(1)(i) and (b)(1)(i) by adding the words `an Indian tribe,
ANC or NHO (or a wholly owned entity of such tribe, ANC or NHO),'
before the words `or any combination of these.' '' The final rule
amended the requirements for the Small Business Innovation Research
(SBIR) Program to specifically recognize that a small business concern
owned and controlled by an Indian tribe, Alaska Native Corporation
(ANC) or a Native Hawaiian Organization (NHO) may be eligible to
participate in the SBIR Program. Historically, the eligibility
requirements for the SBIR Program have been consistent with those for
SBA's Small Business Technology Transfer (STTR) Program. While the
final rule amended the eligibility requirements for the SBIR Program in
Sec. 124.702(a)(1)(i), it inadvertently did not make the same
corresponding change to the STTR Program. As such, this correction is
necessary to add that same clarifying language to the STTR eligibility
requirements as that added to the SBIR requirements.
Second, a correction is needed to delete Sec. 124.110(g)(2). After
this correction, a corresponding correction to the numbering also needs
to occur that would eliminate paragraph (g)(1) as a separate paragraph
and move the substance of paragraph (g)(1) to the end of the
introductory text of paragraph (g). In response to public comment, SBA
changed the way in which SBA requires an applicant concern to
demonstrate the economic disadvantage status of a NHO. See Sec.
124.110(c) (81 FR 48580-48581). Section 124.110(g)(2) had meaning only
with respect to the way SBA previously required an applicant concern to
demonstrate the economic disadvantage status of an NHO. SBA mistakenly
did not remove Sec. 124.110(g)(2) when it made the change to Sec.
124.110(c). This correction is needed to remove the paragraph because
it is now inconsistent with the July 25, 2016 final rule.
Third, a correction is needed to make a conforming change to Sec.
124.112. The final rule eliminated the requirement from Sec. 124.203
that an applicant must submit IRS Form 4506T in every case, and
clarified that SBA may request additional documentation during the 8(a)
application process when necessary. However, the final rule did not
make the conforming change that the IRS Form 4506T is not needed in
every case for an annual review as well, but, rather, may be requested
on a case-by-case basis during an annual review by SBA.
Fourth, due to the change made to Sec. 121.103(h), which
eliminated the ability of a joint venture to be populated with
individuals intended to perform contracts awarded to the joint venture,
a conforming correction is needed to Sec. 124.513(c), which references
populated joint ventures. Specifically, Sec. 124.513(c)(4) provided
that in the case of a populated separate legal entity joint venture,
8(a) Participant(s) must receive profits from the joint venture
commensurate with their ownership interests in the joint venture.
Because SBA eliminated populated joint ventures, that provision is now
superfluous and needs to be deleted.
Fifth, a correction is needed to amend an incorrect cross
reference. The final rule revised Sec. 126.615. That revised language
referenced an exception contained in Sec. 126.618(d). There is no
paragraph (d). Therefore, the cross reference contained in Sec.
126.615 is revised to read Sec. 126.618.
Sixth, a correction is needed to correct a mistaken instruction.
Instruction 2 on page 48578 purported to revise the last two sentences
of the introductory text of 13 CFR 121.103(h). However, on May 31,
2016, SBA amended paragraph (h) by adding a new final sentence to the
introductory text of paragraph (h). 81 FR 34243, 34258, instruction
2.c. Consequently, a sentence that SBA intended to remove remains in
paragraph (h), while a sentence that SBA added on May 31, 2016 was
revised. Thus, SBA is revising the introductory text of paragraph (h)
to read as intended under both rules.
List of Subjects
13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Individuals with disabilities, Loan programs--
business, Reporting and recordkeeping requirements, Small businesses.
13 CFR Part 124
Administrative practice and procedures, Government procurement,
Hawaiian natives, Indians--business and finance, Minority businesses,
Reporting and recordkeeping requirements, Tribally-owned concerns,
Technical assistance.
13 CFR Part 126
Administrative practice and procedure, Government procurement,
Penalties, Reporting and recordkeeping requirements, Small businesses.
Accordingly, 13 CFR parts 121,124, and 126 are corrected by making
the following correcting amendments:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 662, and 694a(9).
0
2. Amend Sec. 121.103 by revising the introductory text of paragraph
(h) to read as follows:
Sec. 121.103 How does SBA determine affiliation?
* * * * *
(h) Affiliation based on joint ventures. A joint venture is an
association of individuals and/or concerns with interests in any degree
or proportion consorting to engage in and carry out no more than three
specific or limited-purpose business ventures for joint profit over a
two year period, for which purpose they combine their efforts,
property, money, skill, or knowledge, but not on a continuing or
permanent basis for conducting business generally. This means that a
specific joint venture entity generally may not be awarded more than
three contracts over a two year period, starting from the date of the
award of the first contract, without the partners to the joint venture
being deemed affiliated for all purposes. Once a joint venture receives
one contract, SBA will determine compliance with the three awards in
two years rule for future awards as of the date of initial offer
including price. As such, an individual joint venture may be awarded
more than three contracts without SBA finding general affiliation
between the joint venture partners where the joint venture had received
two or fewer contracts as of the date it submitted one or more
additional offers which thereafter result in one or more additional
contract awards. The same two (or more) entities may create additional
joint ventures, and each new joint venture entity may be awarded up to
three contracts in accordance with this section. At some point,
however, such a longstanding inter-relationship or contractual
dependence between the same joint venture partners will lead to a
finding of general affiliation between and among them. For purposes of
this provision and in order to facilitate tracking of the number of
contract
[[Page 71983]]
awards made to a joint venture, a joint venture: Must be in writing and
must do business under its own name; must be identified as a joint
venture in the System for Award Management (SAM); may be in the form of
a formal or informal partnership or exist as a separate limited
liability company or other separate legal entity; and, if it exists as
a formal separate legal entity, may not be populated with individuals
intended to perform contracts awarded to the joint venture (i.e., the
joint venture may have its own separate employees to perform
administrative functions, but may not have its own separate employees
to perform contracts awarded to the joint venture). SBA may also
determine that the relationship between a prime contractor and its
subcontractor is a joint venture, and that affiliation between the two
exists, pursuant to paragraph (h)(5) of this section. For purposes of
this paragraph (h), contract refers to prime contracts, and any
subcontract in which the joint venture is treated as a similarly
situated entity as the term is defined in part 125 of this chapter.
* * * * *
Sec. 121.702 [Amended]
0
3. Amend Sec. 121.702(b)(1)(i) by adding the words ``an Indian tribe,
ANC or NHO (or a wholly owned business entity of such tribe, ANC or
NHO),'' before the words ``or any combination of these''.
PART 124--8(A) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS
0
3. The authority citation for part 124 continues to read as follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and
Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L.
101-574, section 8021, Pub. L. 108-87, and 42 U.S.C. 9815.
0
4. Amend Sec. 124.110 by revising paragraph (g) to read as follows:
Sec. 124.110 Do Native Hawaiian Organizations have any special rules
for applying to the 8(a) BD program?
* * * * *
(g) An NHO-owned firm's eligibility for 8(a) BD participation is
separate and distinct from the individual eligibility of the NHO's
members, directors, or managers. The eligibility of an NHO-owned
concern is not affected by the former 8(a) BD participation of one or
more of the NHO's individual members.
* * * * *
Sec. 124.112 [Amended]
0
5. Amend Sec. 124.112 by adding the word ``and'' at the end of
paragraph (b)(8), removing paragraph (b)(9), and redesignating
paragraph (b)(10) as paragraph (b)(9).
0
6. Amend Sec. 124.513 by revising paragraph (c)(4) to read as follows:
Sec. 124.513 Under what circumstances can a joint venture be awarded
an 8(a) contract?
* * * * *
(c) * * *
(4) Stating that the 8(a) Participant(s) must receive profits from
the joint venture commensurate with the work performed by the 8(a)
Participant(s);
* * * * *
PART 126--HUBZONE PROGRAM
0
7. The authority citation for part 126 continues to read as follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p), 644; and 657a; Pub.
L. 111-240, 24 Stat. 2504.
Sec. 126.615 [Amended]
0
8. Amend Sec. 126.615 by removing ``Sec. 126.618(d)'' and adding in
its place ``Sec. 126.618''.
A. John Shoraka,
Associate Administrator for Government Contracting and Business
Development.
[FR Doc. 2016-25080 Filed 10-18-16; 8:45 am]
BILLING CODE 8205-01-P